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Harry Istepanian - Venezuela’s Oil and the Global Power Struggle | Ep 495, Dec 14, 2025

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Conversations on Groong - December 14, 2025

In this episode of Conversations on Groong, we examine how Venezuela’s vast oil reserves have become entangled in global conflict. The discussion links US pressure on Caracas to efforts to drive down oil prices, weaken Russia’s war effort in Ukraine, and limit Iran’s regional power amid rising fears of a wider war. We also explore how a revived Venezuelan oil sector could disrupt OPEC+, reshape Middle East politics, and alter the balance of power across today’s conflict zones.

Topics:

  • Venezuela’s oil and US pressure
  • Trump, oil prices, and OPEC+
  • Middle East fallout from cheap oil
  • Ukraine war and Iran conflict stakes

Guest: Harry Istepanian

Hosts:

Episode 495 | Recorded: December 11, 2025

SHOW NOTES: https://podcasts.groong.org/495

VIDEO: https://youtu.be/g0bH2EFA3GU

#Venezuela #OilPolitics #Geopolitics #USForeignPolicy #EnergyWars


Subscribe and follow us everywhere you are: linktr.ee/groong

Asbed (00:00:04):

Hello, everyone, and welcome to this Conversations on Groong episode.

Asbed (00:00:08):

Today, we look at Venezuela and the trouble that the U.S.

Asbed (00:00:11):

is brewing in its direction.

Asbed (00:00:13):

And you might ask, Venezuela on Groong?

Asbed (00:00:16):

What gives?

Asbed (00:00:18):

Well, yeah...

Asbed (00:00:19):

As we look at why the White House might be ramping up its rhetoric against

Asbed (00:00:22):

Venezuela through the wider lens of global geopolitics,

Asbed (00:00:27):

we see how understanding this issue ties a lot of aspects of the global conflicts

Asbed (00:00:32):

together,

Asbed (00:00:33):

from the Middle East,

Asbed (00:00:34):

Ukraine, Iran,

Asbed (00:00:35):

and so on.

Asbed (00:00:36):

So to help us understand how this oil producer ties Latin America,

Asbed (00:00:41):

the Middle East,

Asbed (00:00:42):

and other parts of the world,

Asbed (00:00:44):

we're going to be joined by energy expert Harry Istepanian.

Hovik (00:00:48):

But before we bring in Harry, we have a small request for our listeners.

Hovik (00:00:52):

You know, big powers fight over oil, but we run on something more fragile.

Hovik (00:00:57):

Listener support.

Hovik (00:00:58):

If you value independent coverage without outside funding or hidden sponsors,

Hovik (00:01:04):

please consider donating to keep Groom going.

Hovik (00:01:07):

Podcasts.groong.org/donate is the link.

Hovik (00:01:11):

And as always,

Hovik (00:01:12):

COMMENT,

Hovik (00:01:13):

LIKE, and share,

Hovik (00:01:14):

because that helps us fight the algorithmic battle that we are engaged in.

Hovik (00:01:18):

Thanks for listening, and on with the show.

Asbed (00:01:22):

Mr. Istepanian, welcome to The Groong Podcast.

Asbed (00:01:24):

My pleasure.

Hovik (00:01:26):

Harry Harutioun, pleasure to have you.

Asbed (00:01:30):

Thank you very much, Harvey, for having me.

Asbed (00:01:33):

So as this is your first time on our show,

Asbed (00:01:35):

would you tell us a little bit about yourself and your expertise in energy?

Harry (00:01:40):

Well, thank you very much, Asbed.

Harry (00:01:43):

Well, my name is Harry Istepanian.

Harry (00:01:45):

I spent the last 35 years actually working on energy sector and water to some

Harry (00:01:51):

extent in Middle East,

Harry (00:01:53):

Southeast Asia,

Harry (00:01:54):

Australia and New Zealand.

Harry (00:01:57):

Recently, the last three years,

Harry (00:01:58):

I founded Iraq Climate Change Center,

Harry (00:02:02):

which is basically a think tank based in Washington,

Harry (00:02:05):

D.C.

Harry (00:02:06):

And we look to the all aspects of climate impact,

Harry (00:02:12):

climate change impact on Iraq's livelihood,

Harry (00:02:16):

including mitigation,

Harry (00:02:18):

adaptation.

Harry (00:02:20):

And of course,

Harry (00:02:21):

there is always an interest in Armenian matters,

Harry (00:02:26):

Armenian issues,

Harry (00:02:27):

especially on the energy sector.

Hovik (00:02:30):

Well, today's talk is as Armenian as it gets.

Hovik (00:02:33):

We're going to talk about Venezuela.

Hovik (00:02:35):

but uh you know stay with us because um you know even though they're on the other

Hovik (00:02:41):

side of the earth um there is you know what happens in Venezuela may also affect

Hovik (00:02:47):

our region so as you know Venezuela or as you may know Venezuela has the world's

Hovik (00:02:52):

largest oil reserves yet its output has collapsed uh mainly because of uh issues

Hovik (00:02:59):

geopolitical issues with the us uh u.s oil companies were expelled in 2007

Hovik (00:03:05):

and also u.s sanctions in 2017 and 2019 added to that so production fell from 2.2 <million>

Hovik (00:03:12):

barrels a day to 500,000 barrels by I guess by 2020 and probably it's stable since

Hovik (00:03:21):

then now this sharp decline had forced the united states to depend on other

Hovik (00:03:25):

suppliers at a time when its own strategic petroleum reserve sits at historical

Hovik (00:03:30):

lows now

Hovik (00:03:31):

with the major U.S.

Hovik (00:03:32):

military buildup around Venezuela.

Hovik (00:03:35):

And just today we heard that the U.S.

Hovik (00:03:37):

seized an oil tanker, so it seems like things are getting serious.

Hovik (00:03:43):

There is open talk of possible intervention,

Hovik (00:03:46):

and access to cheap Venezuelan oil has become part of Washington's wider push,

Hovik (00:03:51):

perhaps to lower global oil prices and counter Russia and Iran's influence on the

Hovik (00:03:58):

prices.

Hovik (00:03:59):

So maybe we can start with this.

Hovik (00:04:02):

How low is the U.S.

Hovik (00:04:04):

strategic petroleum reserve today, and why does that matter?

Harry (00:04:08):

Well, you think that probably the United States would have a huge reserve.

Harry (00:04:15):

In fact, it's not, actually.

Harry (00:04:17):

It has dropped down from 700 million barrels to less than 300 million barrels

Harry (00:04:24):

during President Biden's time.

Harry (00:04:29):

The reserve has gone up since then because of the policy of the new U.S.

Harry (00:04:37):

administration.

Harry (00:04:39):

And it's around 450 million barrels right now,

Harry (00:04:43):

which is still actually less than the normal reserve of the United States.

Harry (00:04:52):

And that's a major concern.

Harry (00:04:56):

for the current administration.

Harry (00:04:59):

This administration has been trying for some time by now to lower the gasoline

Harry (00:05:08):

price in the United States.

Harry (00:05:11):

But because of the geopolitics, the Ukrainian-Russian war, the sanctions on Iran,

Harry (00:05:21):

and so on.

Harry (00:05:23):

Those have all affected on the prices of oil.

Harry (00:05:25):

Having said that, it has dropped down to in the range of 60, 65 dollars per barrel.

Harry (00:05:34):

And still, the US administration is not happy.

Harry (00:05:39):

When President Trump was campaigning, he promised that the oil price will drop

Harry (00:05:46):

you know,

Harry (00:05:47):

less than or close to $50,

Harry (00:05:50):

you know, his policy of drill,

Harry (00:05:52):

baby, drill,

Harry (00:05:54):

it apparently hasn't affected the oil prices so far.

Harry (00:06:00):

So we expect that the operation,

Harry (00:06:03):

you know,

Harry (00:06:04):

in the Caribbean and Latin America right now is part of

Harry (00:06:11):

the US plan to boost the production of a country like Venezuela.

Harry (00:06:18):

As you said, Venezuela has the biggest oil reserve in the world.

Harry (00:06:22):

It's close to more than 300 billion barrels.

Harry (00:06:26):

And probably the administration thinks that by boosting the production of Venezuela

Harry (00:06:35):

in the future,

Harry (00:06:36):

if they succeeded to,

Harry (00:06:39):

you know,

Harry (00:06:40):

either change the regime in Venezuela in Caracas or not.

Harry (00:06:44):

That will boost the production and oversupply in the market and probably will bring

Harry (00:06:51):

the prices down.

Hovik (00:06:52):

Why is this a military problem?

Hovik (00:06:54):

Why can't Trump just buy Venezuelan oil?

Hovik (00:06:56):

We heard, I believe, Maduro offer that Venezuela can sell its oil to the United States.

Harry (00:07:04):

It's a good question.

Harry (00:07:05):

I think the United States and Venezuela,

Harry (00:07:09):

they reached to some sort of agreement in the past,

Harry (00:07:12):

when Chevron went back and started production,

Harry (00:07:17):

but it was marginal.

Harry (00:07:19):

I mean, as you said, the production right now is about 500,000 barrels.

Harry (00:07:24):

That's less than 1 million in some cases.

Harry (00:07:29):

But still, that's not satisfactory for a country that has the biggest reserve.

Harry (00:07:37):

In the past, like you mentioned, Venezuela was producing around 2 million in the 70s.

Harry (00:07:46):

In the 80s, they've been

Harry (00:07:49):

producing around 3.2 million barrels.

Harry (00:07:54):

And the United States,

Harry (00:07:56):

you know,

Harry (00:07:57):

their policy is probably right now as many things is going back to the Monroe

Harry (00:08:02):

Doctrine that basically this South America is part of U.S.

Asbed (00:08:11):

It's manifest destiny.

Asbed (00:08:13):

All of the Americas belong to the United States.

Harry (00:08:16):

Exactly.

Harry (00:08:17):

And we have seen the influence of China because most of the Venezuelan oil is

Harry (00:08:27):

exported to China at the moment.

Harry (00:08:31):

Some goes to the States, but most of it goes to China.

Harry (00:08:35):

And Russia, of course, and Iran, they have an influence.

Harry (00:08:40):

in that region as well.

Harry (00:08:42):

So,

Harry (00:08:44):

the United States,

Harry (00:08:45):

I think they basically,

Harry (00:08:47):

they reached to a conclusion that,

Harry (00:08:49):

well, this is our territory and others should be out of this.

Hovik (00:08:55):

Now,

Hovik (00:08:57):

if sanctions are lifted and US companies return,

Hovik (00:09:01):

presumably through a military coup or a military regime change,

Hovik (00:09:08):

how fast could production increase?

Hovik (00:09:12):

And I'm sorry,

Hovik (00:09:13):

I have a lot of opinions on the humanitarian aspect of this and international law

Hovik (00:09:17):

aspect of this, but we're not talking about that.

Hovik (00:09:18):

So just from a pure oil production calculation,

Hovik (00:09:25):

What do you think is the capacity of Venezuela and in what time frame?

Harry (00:09:30):

Yes.

Harry (00:09:32):

If there is, I mean, so far we haven't seen that military buildup.

Harry (00:09:38):

Reports say probably we have 10,000,

Harry (00:09:40):

between 10,000 and 15,000,

Harry (00:09:41):

military forces in the area,

Harry (00:09:42):

you know,

Harry (00:09:43):

either naval or,

Harry (00:09:44):

you know,

Harry (00:09:51):

But in case if there is any military intervention in Venezuela,

Harry (00:09:59):

definitely we will see the same scenario of Iraq repeating in Venezuela where,

Harry (00:10:07):

you know,

Harry (00:10:08):

you have an interruption of the oil production for some time.

Harry (00:10:12):

And that, of course, will affect on the market and the price probably could hike.

Harry (00:10:19):

But once,

Harry (00:10:21):

and this is the policy that the United States followed in Iraq,

Harry (00:10:26):

that the first thing they did,

Harry (00:10:28):

they secured the oil fields in Iraq in 2003.

Harry (00:10:31):

So we might see the same

Harry (00:10:34):

thing or same scenario might happen in Venezuela and the American military might

Harry (00:10:43):

secure the oil fields first in Venezuela and start pumping oil again.

Harry (00:10:53):

And many expect that the oil production might go easily to two million barrels if

Harry (00:11:02):

the American IOCs go back to Venezuela and we might see the production might go up

Harry (00:11:13):

to 2 million barrels within say six to 12 months at most.

Hovik (00:11:20):

And what are the risks to the US, to South America and to the world?

Hovik (00:11:25):

What are the major risks that you see?

Harry (00:11:29):

Well,

Harry (00:11:30):

any military intervention actually carries huge risks on the stability of the

Harry (00:11:36):

region, first.

Harry (00:11:37):

Second,

Harry (00:11:39):

the transport of,

Harry (00:11:42):

oil to other parts of the world,

Harry (00:11:47):

there's a huge risk that there might be guerrilla warfare,

Harry (00:11:54):

you know,

Harry (00:11:55):

and this is what I think what Venezuelan regime is planning if,

Harry (00:12:03):

you know,

Harry (00:12:04):

if there is a full-scale

Harry (00:12:06):

military invasion to the country.

Harry (00:12:10):

So there are quite a few risks there that might interrupt the oil supply.

Harry (00:12:19):

The thing is that other countries like Saudi Arabia,

Harry (00:12:24):

which has a huge reserve capacity,

Harry (00:12:28):

they might pump

Harry (00:12:31):

additional oil to the market to compensate for any disruption to the oil supply,

Harry (00:12:44):

mainly to China.

Asbed (00:12:45):

Harry,

Asbed (00:12:46):

there is growing concern in the Middle East that if Venezuela ramps up production

Asbed (00:12:50):

to around 2 million barrels per day with the US backing,

Asbed (00:12:54):

the supply balance would shift and could trigger a fall in global prices.

Asbed (00:12:59):

This would break the price floor that OPEC-1 has worked very hard to maintain near

Asbed (00:13:04):

approximately $60 per barrel.

Asbed (00:13:06):

Why is Venezuela a key lever for Trump's target for bringing oil under $50 per barrel?

Harry (00:13:14):

Yeah, it's a good question, actually.

Harry (00:13:16):

It's part of this tension between OPEC and OPEC Plus with the U.S.

Harry (00:13:22):

administration.

Harry (00:13:23):

You know, there's always this bill, an OPEC bill,

Asbed (00:13:28):

Can you quickly tell us what the difference is between OPEC and OPEC Plus?

Harry (00:13:33):

Well, OPEC is basically the oil companies which they,

Harry (00:13:40):

gathered in 1960 to,

Harry (00:13:43):

it's a cartel.

Harry (00:13:46):

Venezuela was, by the way, one of the founders of OPEC.

Harry (00:13:50):

And basically, their aim was to control the price and the production.

Harry (00:13:59):

Basically, by controlling the production, you can control the price in the international market.

Harry (00:14:09):

But a few years ago, other countries, major producers like Russia mainly,

Harry (00:14:17):

and some other small producers, they came together and they decided to stop any trade war.

Harry (00:14:28):

It happened a few years ago between Saudi Arabia and Russia,

Harry (00:14:32):

where Russia was competing in increasing the production

Harry (00:14:37):

while Saudi Arabia were doing the same thing, and that harmed the oil prices.

Harry (00:14:45):

So they came together, and they set up this alliance of countries, major countries of producers.

Harry (00:14:56):

OPEC Plus, mainly now, they control around 75 percent

Harry (00:15:02):

of the production in the world.

Harry (00:15:05):

We know that the two other major producers are United States and also Canada.

Harry (00:15:13):

So apart from those two countries,

Harry (00:15:15):

of course,

Harry (00:15:16):

there are small other producers like Angola we have and so on.

Harry (00:15:21):

But apart from those major producers, most of the oil comes from OPEC plus countries.

Asbed (00:15:29):

And the U.S. is producing approximately 12 million barrels per day?

Harry (00:15:34):

More than that at the moment.

Harry (00:15:38):

Around 14 million barrels.

Harry (00:15:41):

Some of that oil, actually, they are using it for the strategic reserve.

Harry (00:15:47):

Most of it, around 10, 12, like you said, goes to internal consumption.

Asbed (00:15:58):

Okay.

Asbed (00:15:59):

How does the difference between,

Asbed (00:16:01):

let's say, the 2 million to 500,000 barrels per day from Venezuela make such a huge difference

Asbed (00:16:07):

for the United States producing more than 12 million barrels per day?

Asbed (00:16:11):

It seems like it's a few percentages and there's such a huge focus on this to the

Asbed (00:16:17):

point of military action.

Harry (00:16:20):

Correct.

Harry (00:16:21):

But don't forget that the total production of the world is about 101 million barrels a day.

Harry (00:16:30):

Now, the IEA, for example, OPEC,

Harry (00:16:36):

They were expecting that the demand for next year in 2026 will go for about 2 million barrels.

Harry (00:16:45):

So the total demand for oil will be around 3 million barrels.

Harry (00:16:51):

So now if you put 2 million barrels immediately into the market from Venezuela,

Harry (00:16:56):

definitely that will take the biggest chunk.

Harry (00:16:59):

of what the the world demand is for crude and wouldn't leave any room for other

Harry (00:17:07):

countries to increase their production so literally you are flooding the market

Harry (00:17:12):

with the two million barrels and that of course will drop the price at least

Harry (00:17:18):

between so anywhere between 5 to 15 percent easily

Asbed (00:17:23):

Yeah, that's very interesting.

Asbed (00:17:24):

Now, when we have a world that's gripped by wars in Ukraine,

Asbed (00:17:27):

Gaza,

Asbed (00:17:28):

tensions with Iran,

Asbed (00:17:30):

a sudden flow of cheap Venezuelan oil could suddenly hit the budgets of some of

Asbed (00:17:34):

these countries,

Asbed (00:17:35):

Russia,

Asbed (00:17:36):

Saudi Arabia,

Asbed (00:17:37):

Iran, you know, all of the Gulf states.

Asbed (00:17:39):

And we'll talk about those in a moment.

Asbed (00:17:42):

What happens to the Russian oil and Russia's national budget,

Asbed (00:17:46):

GDP,

Asbed (00:17:47):

and of course, as a result,

Asbed (00:17:48):

in the current situation,

Asbed (00:17:49):

their war budget as well?

Asbed (00:17:51):

What happens if the price falls under $50 per barrel?

Harry (00:17:55):

Well, there's one point regarding Venezuelan oil quality.

Harry (00:18:01):

It's a heavy oil, sour, you know, mainly is designed...

Harry (00:18:07):

The Gulf Coast refiners are designed, you know, historically were designed

Harry (00:18:15):

for the Venezuelan oil.

Harry (00:18:18):

So we expect that most of that two million barrels,

Harry (00:18:23):

if they manage to increase the production,

Harry (00:18:25):

will go to the United States.

Harry (00:18:29):

But that would mean that the United States will cut the importing oil from other

Harry (00:18:35):

countries like Saudi Arabia and so on.

Harry (00:18:40):

The OPEC countries or OPEC plus countries will try to find new markets to fill in the gap.

Harry (00:18:49):

Now, regarding your question about the world production, right, Asbed?

Asbed (00:19:01):

Specifically, how this could be affecting Russia's economy, GDP, and their oil production?

Harry (00:19:07):

Yes.

Harry (00:19:08):

Well, we know that Russia produces around 10 million barrels right now.

Harry (00:19:14):

And most of that, most of the oil they export,

Harry (00:19:18):

goes to China at the moment and India.

Harry (00:19:21):

Now,

Harry (00:19:22):

with the recent sanction on Luke Oil,

Harry (00:19:29):

other Russian oil companies,

Harry (00:19:33):

that has diverted some of Russian attention

Harry (00:19:40):

to other markets or sell it, you know, in the spot market, their oil.

Harry (00:19:45):

And definitely,

Harry (00:19:47):

even if we say that the Brent oil is around $62 or $63 now,

Harry (00:19:53):

the Russians,

Harry (00:19:54):

you know,

Harry (00:19:55):

they're selling their oil,

Harry (00:19:58):

their oil in the spot market much less than that, even in the range of $55 or $53 a barrel.

Harry (00:20:08):

So,

Harry (00:20:09):

you know, it's...

Harry (00:20:11):

Of course,

Harry (00:20:13):

Russia needs that,

Harry (00:20:15):

you know,

Harry (00:20:16):

foreign currency,

Harry (00:20:18):

and they have to find places outside,

Harry (00:20:22):

you know,

Harry (00:20:23):

the radar.

Harry (00:20:24):

And this is where, you know, this...

Harry (00:20:27):

the seas of the tanker comes,

Harry (00:20:30):

you know,

Harry (00:20:32):

the Americans were monitoring carefully,

Harry (00:20:36):

you know, all this network of tankers,

Harry (00:20:41):

you know, carrying either Iranian oil,

Harry (00:20:44):

Russian oil,

Harry (00:20:46):

Venezuelan oil and so on,

Harry (00:20:47):

where they are uploading,

Harry (00:20:51):

where they are,

Harry (00:20:52):

you know,

Harry (00:20:53):

taking that oil, who are the buyers, and so on.

Harry (00:20:56):

So it's a very complicated network.

Harry (00:21:00):

We know,

Harry (00:21:01):

for example,

Harry (00:21:03):

the Iranian oil moves from one tanker to another just to conceal their

Harry (00:21:11):

destinations.

Asbed (00:21:12):

If the price of oil would drop,

Asbed (00:21:15):

let's say,

Asbed (00:21:16):

to under 50,

Asbed (00:21:17):

does that mean Russia's barrel would drop to maybe in the 40s?

Harry (00:21:22):

Possible. We know, for example, countries like

Harry (00:21:29):

Turkey, for example, they buy Russian oil at a discount price.

Harry (00:21:35):

China, they do the same.

Harry (00:21:37):

India was doing the same until,

Harry (00:21:39):

you know,

Harry (00:21:40):

the sanction imposed by the US administration happened.

Harry (00:21:44):

We don't know actually how right now Russia is exporting their oils from,

Harry (00:21:54):

say,

Harry (00:21:55):

the Black Sea, for example,

Harry (00:21:56):

or

Harry (00:21:57):

you know through the pipes there were lots of talking for example that some of the

Harry (00:22:03):

oil goes to country like Azerbaijan and Azerbaijan does the marketing of that oil

Harry (00:22:09):

so there are quite lots of tunnels which

Harry (00:22:13):

The Russians were funneling their oil to the international market.

Asbed (00:22:19):

Yeah, Azerbaijan is an interesting vector.

Asbed (00:22:21):

Actually, that was my next question.

Asbed (00:22:23):

How does the price of oil on the world market affect Azerbaijan?

Asbed (00:22:28):

Because it is a producer, not a gigantic producer, but it is a producer.

Asbed (00:22:34):

But it also funnels a lot of Russian oil to the West so that it is essentially

Asbed (00:22:39):

relabeled as Azeri oil so that the West can feel like they're not using Russian

Asbed (00:22:44):

oil.

Harry (00:22:44):

That's right.

Harry (00:22:45):

I mean,

Harry (00:22:46):

if you look to the list of oil prices,

Harry (00:22:48):

international oil prices,

Harry (00:22:50):

you will see that the Azerbaijani oil

Harry (00:22:55):

is at least $7, $8 above the Brent price, usually.

Harry (00:23:00):

I mean,

Harry (00:23:01):

yesterday or the day before I was checking it was around $73,

Harry (00:23:06):

while Brent was around $63 or something.

Harry (00:23:10):

So it's always the Azerbaijani oil price is higher.

Harry (00:23:15):

But that's probably, you know, part of it, because it's a light crude,

Harry (00:23:21):

And also, Azerbaijanis, they have their clients, undisclosed clients.

Harry (00:23:27):

We know that 60% of it goes, for example, to a place like Israel, for example.

Harry (00:23:34):

So we don't know exactly how the Azerbaijani oil is marketed internationally.

Harry (00:23:44):

And of course, when you sell it to clients like Israel, probably you sell it at a premium price.

Asbed (00:23:54):

Yeah, I don't quite understand.

Asbed (00:23:55):

If it's a global market for the price of the crude,

Asbed (00:23:59):

there's either an incentive because it's light crude,

Asbed (00:24:02):

sweet crude,

Asbed (00:24:03):

or whatever,

Asbed (00:24:04):

and it takes a lot less to refine it.

Asbed (00:24:06):

Or can you explain why somebody would buy more expensive Azerbaijani oil instead

Asbed (00:24:12):

of, let's say,

Asbed (00:24:13):

Russian or American or whatever,

Asbed (00:24:16):

or even Venezuelan?

Harry (00:24:17):

Yes, you know...

Harry (00:24:20):

Always historically, the oil trade was linked to geopolitics since the 70s.

Harry (00:24:33):

But in the case of Israel, it also depends on the type of the refineries they have.

Harry (00:24:45):

It's probably, it's most likely, it's designed for light crude rather than heavy oil.

Harry (00:24:52):

So most likely that's one of the reasons why they keep buying Azerbaijani oil.

Harry (00:25:01):

They buy also, having said that, I mean, they buy oil from West Africa, for example, as well.

Harry (00:25:10):

So they have different sources, but mainly they rely on the Azerbaijani oil.

Hovik (00:25:17):

So we talked about the potential for this move,

Hovik (00:25:25):

specifically the Venezuelan oil being opened up to send ripple effects to the

Hovik (00:25:30):

Middle East.

Hovik (00:25:33):

lowering prices and affecting producers.

Hovik (00:25:36):

We didn't talk about Iran yet,

Hovik (00:25:37):

but is this a single move solution to breaking the budgets of the many other

Hovik (00:25:43):

states,

Hovik (00:25:45):

many states on the other side of geopolitical conflicts from the U.S.?

Hovik (00:25:48):

What is the Ukraine war factor and the potential new Iran war factor in this equation?

Harry (00:25:57):

Well,

Harry (00:25:58):

surprisingly, we haven't seen the oil prices going beyond the $100 for at least for a while.

Harry (00:26:09):

And the reason for that is that there is lots of surplus oil right now in the market.

Harry (00:26:19):

I mean, each country can increase their production,

Harry (00:26:23):

like I said,

Harry (00:26:24):

can compensate for any interruption.

Harry (00:26:28):

in the supply.

Harry (00:26:30):

And that's what kept the prices down, at least at the moment.

Harry (00:26:35):

It's like OPEC Plus at the moment,

Harry (00:26:39):

every month or every two months,

Harry (00:26:41):

they meet and they specify the quota for each producer.

Harry (00:26:47):

And they monitor the market.

Harry (00:26:50):

They see how much the demand will look like on the next, say, three months.

Harry (00:26:55):

And according to that, they increase the quota or decrease it.

Harry (00:27:00):

But some of those countries, including Russia, actually, they couldn't meet that quota.

Harry (00:27:05):

But because of the surplus right now in the market,

Harry (00:27:09):

that's preventing,

Harry (00:27:13):

basically,

Harry (00:27:14):

the oil prices to go up.

Harry (00:27:16):

at the moment.

Harry (00:27:17):

And this is what also I'm expecting will happen if there is a military intervention

Harry (00:27:25):

in Venezuela,

Harry (00:27:26):

for example.

Harry (00:27:27):

Within the range of 500 or 900,000 barrels that Venezuela currently produces,

Harry (00:27:36):

Easily, other countries like Saudi Arabia and UAE can increase their production.

Harry (00:27:45):

Iraq even can increase their production.

Harry (00:27:49):

to their regular or their permanent clients they have right now in Asia.

Harry (00:27:58):

So it depends really which way the current situation in Venezuela will go.

Harry (00:28:09):

And also, you mentioned the Ukrainian-Russian war.

Harry (00:28:17):

we haven't seen any impact, actually.

Harry (00:28:20):

I mean, the impact was on the gas rather than on crude oil.

Harry (00:28:26):

You know, we have seen,

Harry (00:28:27):

you know,

Harry (00:28:28):

the gas supply to Europe was interrupted with the Nord Stream 1 and 2.

Hovik (00:28:37):

Yeah, the destruction, yeah.

Harry (00:28:40):

Exactly.

Harry (00:28:41):

I mean, all those kind of,

Harry (00:28:44):

issues has, you know, practically interrupted the gas supply rather than oil supply.

Harry (00:28:52):

The oil supply is relatively easy.

Harry (00:28:55):

It's the gas that most of the countries mainly are relying right now for,

Harry (00:29:03):

you know, power generation,

Harry (00:29:05):

petrochemical and so on.

Hovik (00:29:07):

But,

Hovik (00:29:08):

you know, so going back to this,

Hovik (00:29:09):

you know,

Hovik (00:29:10):

if the theory behind this is that this is somehow related to the US being in

Hovik (00:29:15):

conflict with Russia and Iran,

Hovik (00:29:19):

if that theory is true,

Hovik (00:29:21):

is the single sort of move,

Hovik (00:29:23):

which is capturing Venezuelan oil,

Hovik (00:29:27):

enough to break the backs of those countries,

Hovik (00:29:31):

essentially?

Hovik (00:29:33):

You know, strictly speaking about oil.

Harry (00:29:36):

The plan, in my opinion, the U.S.

Harry (00:29:38):

administration plan is to cut this relation right now between Venezuela,

Harry (00:29:45):

Colombia,

Harry (00:29:46):

and others in Latin America with Iran and Russia.

Harry (00:29:53):

And don't forget the Bolivar Revolution

Harry (00:29:59):

in South America,

Harry (00:30:01):

brought the Russians,

Harry (00:30:03):

you know,

Harry (00:30:04):

the Cubans,

Harry (00:30:05):

you know,

Harry (00:30:06):

the Iranians as well into South America,

Harry (00:30:09):

and that they didn't like the Americans.

Harry (00:30:12):

And I think

Harry (00:30:19):

oil is becoming like part of this geopolitics, in my opinion, between the rifles.

Harry (00:30:29):

Most likely,

Harry (00:30:30):

this is my opinion as well,

Harry (00:30:34):

President Trump's initiative to stop the war in Ukraine is part of a big deal with

Harry (00:30:42):

the Russians that,

Harry (00:30:43):

well, look,

Harry (00:30:46):

We would like you to pull out from South America and return,

Harry (00:30:53):

you can have your part of Ukraine.

Harry (00:30:59):

And,

Harry (00:31:01):

so nobody knows actually what is happening behind closed doors in terms of who will

Harry (00:31:10):

control which parts of the world.

Harry (00:31:15):

Interesting.

Hovik (00:31:16):

Okay, moving on.

Hovik (00:31:18):

So Trump's first foreign trip was to the Middle East, where he was fatayed by the Gulf monarchs.

Hovik (00:31:26):

He was able to secure hundreds of billions of dollars worth of investment pledges

Hovik (00:31:31):

and even got a $400 million airplane as a bribe.

Hovik (00:31:36):

Did I say bribe?

Hovik (00:31:37):

Sorry, I meant gift.

Hovik (00:31:40):

I meant gift, folks, okay?

Hovik (00:31:41):

Trump supporters.

Hovik (00:31:42):

Some of these same countries

Hovik (00:31:45):

Trump visited, are members of OPEC+,

Hovik (00:31:47):

and would seriously be affected by lowering of these oil prices.

Hovik (00:31:51):

So how does Saudi Arabia,

Hovik (00:31:53):

UAE,

Hovik (00:31:54):

and Iraq respond to this sudden price drop,

Hovik (00:31:57):

and wouldn't a flood of Venezuelan oil to the market be seen as an unfriendly act

Hovik (00:32:08):

by these states?

Harry (00:32:10):

Yeah, exactly.

Harry (00:32:11):

I mean, oil producers in general won't be happy, actually, if there's a military intervention.

Harry (00:32:22):

The biggest one would be if, for example, Venezuela exit the OPEC.

Harry (00:32:32):

That will be a major one.

Harry (00:32:35):

And I expect that could happen under the pressure from the United States that they

Harry (00:32:42):

might decide to exit,

Harry (00:32:45):

you know,

Harry (00:32:46):

OPEC.

Harry (00:32:49):

Just to, you know,

Harry (00:32:50):

don't forget,

Harry (00:32:51):

it happened in Iraq before that after the war,

Harry (00:32:56):

you need to build your economy and you cannot build

Harry (00:32:59):

your economy with the current production of oil,

Harry (00:33:02):

we know that it's the main source of income for these countries.

Harry (00:33:08):

And because of the restrictions on the quotas and quotas of oil production for each

Harry (00:33:18):

country,

Harry (00:33:20):

Venezuela might decide

Harry (00:33:22):

It happened before.

Harry (00:33:23):

It's not something that's new.

Harry (00:33:25):

For example, Qatar withdrew from OPEC before Indonesia did the same.

Harry (00:33:33):

So Venezuela could be next.

Harry (00:33:38):

So,

Harry (00:33:40):

of course,

Harry (00:33:41):

Middle East countries,

Harry (00:33:42):

they wouldn't be happy with this because we might go back to the price war.

Harry (00:33:51):

And this doesn't help the producers, and it doesn't help to the world economy as well.

Harry (00:34:01):

So it's very difficult to predict,

Harry (00:34:05):

actually,

Harry (00:34:06):

what will be the next step,

Harry (00:34:10):

what's going to happen in Venezuela.

Hovik (00:34:12):

So assuming that Trump maybe tries to placate some of his friends in the Gulf,

Hovik (00:34:18):

what will be the mechanism or scenarios that he would employ?

Hovik (00:34:24):

Is there anything that the US could do to compensate the Arab world for,

Hovik (00:34:35):

let's say,

Hovik (00:34:36):

one year or two year flooding of the market with cheap Venezuelan oil?

Harry (00:34:40):

The Middle East producers, oil producers, they realized this a long time ago.

Harry (00:34:45):

I mean, if you look to their portfolio,

Harry (00:34:49):

most of their oil export is to China,

Harry (00:34:54):

India,

Harry (00:34:55):

and Southeast Asia at the moment.

Harry (00:34:58):

You know,

Harry (00:34:59):

hardly any oil goes to United States,

Harry (00:35:03):

for example,

Harry (00:35:04):

although the Saudi Arabia and UAE,

Harry (00:35:07):

they have a very good relation with the U.S.,

Harry (00:35:11):

you know, in terms of trade and so on,

Harry (00:35:13):

but still,

Harry (00:35:15):

you know,

Harry (00:35:16):

a very small portion of their crude oil goes to the United States,

Harry (00:35:21):

and part of it because the United States,

Harry (00:35:24):

it's almost self-sufficient.

Harry (00:35:28):

in terms of oil production.

Harry (00:35:29):

And I think most of those countries,

Harry (00:35:37):

like Saudi Arabia and UAE,

Harry (00:35:41):

most of their production goes to refineries.

Harry (00:35:46):

In fact, the refineries in Southeast Asia are designed for Middle Eastern oil.

Harry (00:35:51):

So I think what is going to happen that

Harry (00:35:56):

Saudi Arabia and Iraq and UAE might basically turn and say,

Harry (00:36:04):

well, look,

Harry (00:36:06):

we need to focus on other markets rather than the United States.

Harry (00:36:12):

for selling our oil.

Harry (00:36:14):

And this is what's happening with Iraq, for example.

Harry (00:36:16):

I mean, in Iraq, in some months, it's exporting zero barrel.

Harry (00:36:22):

It goes up to 200,000 barrel and then down to

Harry (00:36:27):

to nothing really.

Asbed (00:36:28):

I'm fascinated with the strategy that we are talking about.

Asbed (00:36:35):

It seems to me like this is almost like a chess move.

Asbed (00:36:38):

With one strategic move, the United States can undermine Russia's economy, can

Asbed (00:36:43):

limit Iran's regional influence.

Asbed (00:36:46):

It can undermine OPEC or reduce its influence on world markets.

Asbed (00:36:51):

In fact, it can probably create markets for its own oil and South America's oil,

Asbed (00:36:56):

a little bit reminiscent of the way the U.S.

Asbed (00:36:58):

essentially ramped up customers for its own natural gas when they undermined

Asbed (00:37:05):

North Stream 2.

Asbed (00:37:06):

Can you talk a little bit about how,

Asbed (00:37:08):

for example,

Asbed (00:37:09):

how fast some of these events could unfold in 2026?

Asbed (00:37:14):

How quickly can Venezuela ramp up its production?

Asbed (00:37:17):

How quickly could some of these countries react and how would they react?

Harry (00:37:23):

In my opinion,

Harry (00:37:25):

There are two main events that might happen in 2026.

Harry (00:37:31):

One, the end of the Ukrainian-Russian war.

Harry (00:37:35):

And we know that part of the agreement or the proposal that the United States

Harry (00:37:42):

submitted is lifting the sanctions on Russia.

Harry (00:37:47):

And if that happens,

Harry (00:37:49):

Russia will be back to the market,

Harry (00:37:52):

ramping up their oil production and start selling it to Europe,

Harry (00:37:58):

for example,

Harry (00:37:59):

again.

Harry (00:38:00):

So, you know, that also might affect the oil price.

Harry (00:38:06):

Second is, of course, Venezuela.

Harry (00:38:08):

If Venezuela decided...

Harry (00:38:10):

If there's a regime change,

Harry (00:38:12):

for example,

Harry (00:38:13):

and they manage to get,

Harry (00:38:15):

in fact,

Harry (00:38:16):

Venezuela can,

Harry (00:38:18):

in the next two years or three years,

Harry (00:38:21):

they might be able to produce around three to four million barrels.

Harry (00:38:27):

if they want.

Harry (00:38:28):

And if United States takes the biggest portion of that production,

Harry (00:38:34):

we will see a huge reduction in the prices of oil.

Harry (00:38:41):

So it's a very volatile market, I would say, next year if these two things happen.

Harry (00:38:48):

First,

Harry (00:38:49):

uh the war in Ukraine ends and second if um you know Venezuela increase its

Harry (00:38:55):

production and of course don't forget that at the moment Iran is also expressing

Harry (00:39:01):

interest to going back to negotiation uh with the united states and um and of

Harry (00:39:08):

course the the trump administration um you know they they are willing to go back

Harry (00:39:15):

the American oil companies

Harry (00:39:18):

If there's an agreement about their nuclear program,

Harry (00:39:24):

the oil companies might go back to Iran and assist Iran in increasing their oil

Harry (00:39:29):

production.

Harry (00:39:30):

So there are quite a few things happening.

Harry (00:39:35):

in the world that might effectively, you know, reduces the oil production.

Harry (00:39:45):

But on the other hand, it doesn't help because if the oil prices go down, what happens is that

Harry (00:39:55):

Most of the countries, they stop investment in new oil fields as well.

Harry (00:39:59):

So there's no incentive for them to increase their production as well.

Harry (00:40:04):

And that could affect basically the economy, the world economy, I would say.

Asbed (00:40:12):

Do you see some of these things panning out in 2026?

Asbed (00:40:16):

Well, let's see.

Harry (00:40:18):

I mean, at the moment,

Harry (00:40:19):

the United States seriously are playing a big role to end the war in Ukraine and

Harry (00:40:28):

also in Venezuela.

Harry (00:40:29):

Let's see what is happening.

Harry (00:40:31):

Probably the agreement with Iran will take some time.

Harry (00:40:34):

So in 2026, most of

Harry (00:40:42):

The experts expect that the oil price will remain in the current level.

Harry (00:40:50):

Having said that, we don't know what tomorrow will bring to us.

Hovik (00:40:57):

I mean, there could be a lot of motives for this move,

Hovik (00:41:00):

but some people are making the dark prediction that this is in preparation for

Hovik (00:41:08):

a war against Iran because,

Hovik (00:41:11):

as you know,

Hovik (00:41:12):

one of the threats that Iran poses is that it could close the Strait of Hormuz in

Hovik (00:41:18):

response to a U.S.-Israeli war in Iran.

Hovik (00:41:21):

I personally am a subscriber to this theory.

Hovik (00:41:24):

So everyone says that it's not an issue of if but when that war starts.

Hovik (00:41:31):

So could this be in preparation for that move and

Hovik (00:41:36):

could the Venezuelan oil compensate for all of the Middle Eastern exporting that is

Hovik (00:41:44):

done to the state of Hormuz?

Harry (00:41:46):

Highly unlikely, actually.

Harry (00:41:48):

I mean, if you combine the Arab countries on the Gulf,

Harry (00:41:55):

take, for example,

Harry (00:41:56):

Kuwait producing around 1.5 million,

Harry (00:41:59):

Iraq 3.5 million,

Harry (00:42:02):

exporting,

Harry (00:42:03):

then UAE will have,

Harry (00:42:06):

and others,

Harry (00:42:09):

it's unlikely Venezuelan oil will compensate for such a disruption.

Harry (00:42:16):

But in my opinion, historically, the Strait of Humus were never closed.

Harry (00:42:23):

I mean, we have seen what they call the battle of the vessels

Harry (00:42:32):

during Iraq-Iran war in the 80s.

Harry (00:42:35):

But we haven't seen any close of the strait itself.

Harry (00:42:42):

So it's highly unlikely we'll see that Iran will decide to close that because it's

Harry (00:42:49):

going to harm the neighboring countries,

Harry (00:42:53):

the Arab neighboring countries in the Gulf.

Harry (00:42:56):

And we know that Iran took

Harry (00:42:59):

you know many years actually to get that uh the normalizing the relation with the

Harry (00:43:06):

uh gulf states so i don't think uh Iran will you know unless there's of course um

Harry (00:43:15):

you know a hostile on on the you know Iranian vessels Iranian refineries

Harry (00:43:22):

exporting facilities and so on, and their oil export drops down to zero, then

Harry (00:43:33):

probably the Iranian will take a different approach.

Hovik (00:43:39):

Yeah, that's the nuclear option that I was thinking about.

Hovik (00:43:45):

I'm not an expert,

Hovik (00:43:49):

but I would assume that that is one of the risks,

Hovik (00:43:53):

maybe it's a low risk,

Hovik (00:43:54):

that could be in the minds of policymakers as they contemplate how they're going to

Hovik (00:44:01):

attack Iran,

Hovik (00:44:02):

unfortunately.

Harry (00:44:03):

Yeah, no.

Harry (00:44:04):

I mean,

Harry (00:44:05):

during the 12-day war between Israel and Iran,

Harry (00:44:09):

we have seen Israelis targeting the nuclear facilities and so on.

Harry (00:44:20):

But in terms of the oil facilities,

Harry (00:44:25):

we haven't seen any major attacks on oil production or oil exports.

Harry (00:44:32):

So I think probably that was part of the agreement with the United States that look,

Harry (00:44:39):

If you are going to target Iran,

Harry (00:44:42):

you should target only the facilities that might cause a threat to the state of

Harry (00:44:47):

Israel rather than interrupting the oil production or oil export that is very

Harry (00:44:58):

important for the Iranian economy in the future.

Hovik (00:45:03):

Yeah, understood.

Hovik (00:45:04):

Well, this was a very interesting discussion, Harry.

Hovik (00:45:08):

Again, I appreciate you coming on our show and hope you come back again soon.

Hovik (00:45:16):

Thank you very much.

Harry (00:45:18):

Thank you for coming on the show.

Harry (00:45:20):

Thank you very much for having me.

Harry (00:45:21):

Thank you.

Asbed (00:45:23):

We've been talking with Harry Istepanian,

Asbed (00:45:25):

who is an independent PMP certified energy expert with over 30 years of experience

Asbed (00:45:29):

in the energy and water sectors.

Asbed (00:45:32):

He has worked for major international consultancy firms and organizations like the

Asbed (00:45:36):

World Bank and USAID on global development projects.

Asbed (00:45:40):

He has authored dozens of publications in prominent journals and think tanks,

Asbed (00:45:44):

including the Brookings Institute and the Atlantic Council.

Asbed (00:45:48):

And Mr. Istepanian is also the founder

Asbed (00:45:50):

of the non-profit think tank,

Asbed (00:45:52):

the Iraq Climate Change Center,

Asbed (00:45:54):

the IC3+,

Asbed (00:45:55):

based in Washington,

Asbed (00:45:57):

D.C.

Hovik (00:45:58):

Folks, Groong does not have a strategic oil reserve or petroleum reserve, but we...

Hovik (00:46:06):

But we are fueled by your support.

Hovik (00:46:08):

So please consider liking, commenting, and sharing to indicate your support.

Hovik (00:46:15):

At the same time,

Hovik (00:46:17):

if you feel generous,

Hovik (00:46:18):

then go to podcasts.groong.org/donate and make a regular recurring donation or

Hovik (00:46:24):

maybe a one-time thing.

Hovik (00:46:25):

So we appreciate all forms of monetary donations.

Asbed (00:46:30):

Keep commenting on our shows.

Asbed (00:46:32):

We read every comment and we'll come back to you.

Asbed (00:46:37):

I'm Asbd Bedrossian in Los Angeles.

Hovik (00:46:40):

And I'm Hovik Manucharyan from Yerevan.

Hovik (00:46:43):

Talk to you soon.

Hovik (00:46:45):

Have a great day.

Head Shot

Asbed Bedrossian

Co-host
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Hovik Manucharyan

Co-host
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Harry Istepanian

Guest

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